View more on these topics

Julian Gibbs

If you could buy a portfolio of shares at a 40 per cent discount, you should be very pleased indeed. This is exactly what higher-rate taxpayers can achieve by investing in venture capital trusts, nearly all of which would have beaten the FTSE 100 – down by 19.3 per cent – over a five-year period, taking into account 40 per cent tax relief.

Many have actually made money without taking into account tax relief over five years, with Close Brothers, Baronsmead, Northern Ventures and Foresight performing particularly well. Close Brothers VCT gained 114 per cent and Foresight 143 per cent.

Now, higher-rate taxpayers can invest up to £200,000 each year – for the next two years anyway – and receive total tax relief of £160,000 over the two-year period.

While investors can cash in their shares after three years, which entitles them to keep the tax rebate, in my opinion they are an excellent long-term investment because capital gains can be paid out as dividends free of tax. This factor, especially in view of the pension cap, should enable long-term investors paying higher-rate tax to get a tax-free uplift to their pension in most years.

However, it is wise to spread the investment between a number of trusts. Of those raising money or likely to in the near future, the ones I like best are Quester VCT 5, which has made a good start and has some interesting investments, Baronsmead VCT 4, which has an excellent record, Aim VCT 2, which has a highly experienced Aim team, and Close Brothers Aim VCT, which is likely to prove another top performer, having risen by 45.9 per cent in the past year.

Because of the wide spread of investments, well run VCTs are no more risky than an individual blue-chip share. Remember, the 40 per cent tax relief only applies to new money being raised and not to existing shares.


BBB makes £4.9m loss

Berkeley Berry Birch made an operating loss of £4.9m in the year to March 31 after turning a profit in February and March this year.BBB&#39s preliminary results show that the group&#39s turnover increased from £53.7m to £66.5m, with its financial advisory, insurance and network divisions all increasing their turnovers. Productivity per adviser also went up […]

Out of context

•”I feel like I am walking into the lion&#39s den wearing a meat suit.” – Portfolio Insurance Consultancy principal Brian Lentz before an appointment with the FSA. •”The point of D-Day was nobody was meant to know about it because it was meant to be a surprise. With A-Day, everyone should know about it but […]

FSA publishes annual report

The FSA has published its annual report, which reveals that fees for IFAs will decrease by around one per cent this year. The actual fees charged relate to the type of business carried out by a firm, so the FSA says that within this average figure there will be considerable differences across industry blocks. The […]

Brokers believe their futures depend on e-commerce according to NU

Brokers who do not embrace the potential of e-commerce will fail according to technically astute intermediaries in a Norwich Union poll of 400 intermediaries. “Techno savvy” brokers are now the UK broker market&#39s dominant group, making up 31 per cent of intermediaries, according to the research. NU reveals intermediaries feel technology plays an important role, […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm